Discretionary alteration to proposed form of orders upheld

Australia

In Louis Vuitton Malletier SA v Knierum, the Federal Court of Australia has refused to recall orders in which it imposed a temporary injunction on the defendant following a settlement agreement between the parties. The court dismissed the plaintiff's complaint that it should not have modified the plaintiff's form for the order, which had proposed a permanent rather than temporary injunction against the defendant.

After being caught importing various items from China that infringed a number of Louis Vuitton Malletier SA's (LVM) registered trademarks in Australia, Jason Leigh Knierum (who was unrepresented) settled an action against him by consenting to a number of proposed orders, including permanent injunctions restraining him from infringing LVM's trademarks and delivering up on oath for destruction any goods and documents in his possession that bore any of LVM's trademarks.

The court was asked to make these proposed orders by consent. In exercising its discretion to refuse the orders as proposed, the court took into account the fact that (i) Knierum was unrepresented, and (ii) the imposition of a permanent injunction would put Knierum at risk of committing two offences for one act of infringement if he were to repeat the offence: first for breach of the Trademarks Act 1995 and second for breach of the injunction. This latter factor was taken into account notwithstanding the fact that the Trademarks Act creates the offence as well as provides for an injunction as an appropriate remedy for infringement.

Upon suggestion by the court, LVM agreed to limit the injunction to a period of five years, whereafter orders were pronounced.

Shortly after, LVM requested that the orders be recalled before they were entered, and that the matter be relisted so it could present further argument in relation to the duration of the injunction.

The court noted that IP right owners, as with any other plaintiff, must prove that there is a risk that the defendant will engage in infringing conduct in the future before a court will grant a permanent injunction against a defendant. The court also preferred the view that, in proving risk of future infringement, such risk should not simply be inferred from past infringement without consideration of other relevant circumstances.

In deciding whether there was a basis to recall the orders, the court held that it had not erred in modifying the consent injunction proposed by the parties. In particular, the court pointed out that LVM did not have any evidence that Knierum would re-offend in the future. Additionally, it considered the imposition of a permanent injunction unduly onerous notwithstanding Knierum's consent, and expressed the view that such an injunction "would not have been agreed to" had Knierum been advised by a lawyer.

The court perceived little risk of Knierum re-offending, given that:

  • the risk of being caught was great;

  • the consequences of being caught were likely to be more than Knierum could bear; and

  • there was no other conduct engaged in by Knierum from which it could be inferred that he would re-offend.

Accordingly, the court refused to recall its orders.

Eugene Ford and Sean McManis, Shelston IP, Sydney

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